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Unclaimed Property

Workshop

Waterbury, Vermont
March 2, 2006

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Part I.
Unclaimed Property 101

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Unclaimed Property
It is the Law
Vermont Statutes Title 27,
Chapter 13
(27 V.S.A. §§1208-1239)

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Starting with
Escheat & Bona Vacantia
The roots of the modern unclaimed property law
go back to the English Common Law escheat and
bona vacantia concepts.
• Concept of “escheat” was applicable to land, that
was returned to the lord if tenant died without
heirs.
• Concept of “bona vacantia” was applicable to
personal property. Bona Vacantia (“vacant
goods”) was a subject to claim only by the crown
on the basis of the “royal prerogative”.
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Modern Statutory
Development
Based on the Common Law of England, American States
gradually established their own abandoned property statutes,
which had limited applicability and more resembled true
escheat.
• In 1908 Massachusetts enacted a statutes covering unclaimed
bank deposits.
• In 1915 California adopted the statutes provided for the escheat
of bank deposits. That statutes required a judicial proceeding to
be filed by the state attorney general to have the particular
deposits declared abandoned and ordered to be turned over to
the states, thereby terminating the rights of owners to recover
their funds.
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Modern Statutory
Development
• 1954 - the First Uniformed Unclaimed Property Act was enacted
• That model legislation was slightly amended in 1966, much more
comprehensively in 1981 and most recently in 1995

Even after being amended several times the primarily characteristics


of the Uniform Unclaimed Property Act remain the same:
• It is custodial in nature;
• It is comprehensive in scope, covers extremely broad range of
unclaimed property types;
• It is a consumer protection law, serving to safeguard the owner’s
property and providing a mechanism for reuniting the owner with the
property;
• It is a revenue measure for the enacting states.
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General Scheme of
Unclaimed Property Reporting

• A holder identifies inactive accounts;


• A holder attempts to locate owners;
• A holder compiles an unclaimed property report in
accordance with the statutory requirements;
• A holder delivers property to the state;
• The state then has the use of the property until
claimed by the owner or the owner’s successor.
The state maintains this liability in perpetuity.
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Important Considerations

• Derivative Rights;
• Statutes of Limitations;
• Private Escheat Laws;
• Jurisdiction to Escheat.

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Jurisdiction to Escheat
The right of a state to escheat property is well settled
by the court.
The Supreme court in Texas v. New Jersey held that
primary right to escheat intangible personal property
belongs to the state of the owner’s last known
address, as shown on the records of the holder.
It was also decided that the secondary right to escheat
belong to the state of incorporation, if there was no
owner’s address in the holder’s records.
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Unclaimed Property

Any type of financial assets, owed to


individuals or businesses, that a holder has
had in its possession for a certain period of
time and that appears to have been
abandoned by the owner.

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Types of Property
Include, but not limited to:

• Savings/ Checking accounts


• Matured bonds/CDs
• Uncashed wages/payroll checks
• Money orders
• Any uncashed/outstanding checks
• Customer overpayments
• Gift cards
• Safe deposit box contents
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Filing Dates

Report Due Date – May 1

The cut-off date is December 31 of the


preceding calendar year

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Dormancy Periods

All property types may be combined by their


dormancy periods into following groups:
• 2 years – Payroll, Demutualization Proceeds;
• 5 years – Safe Deposit Boxes;
• 7 years – Money Orders;
• 15 years – Traveler’s Checks;
• 3 years – All Other Property Types.
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IMPORTANT FILING DATES
TO REMEMBER

Holder Type Property Dormancy Last Activity Reaching Report and


Type Period Date Dormancy Remit Date
All Holders Wages ; Dissolution; 2 years 01/01/03- 01/01/05- 5/01/06
Demutualization 12/31/03 12/31/05
Corporations Stock, Dividends, 3 years 01/01/02- 01/01/05- 5/01/06
Vendor Checks, 12/31/02 12/31/05
Credit Memos,
Pensions, etc.
Banks & Dormant Accounts, 3 years 01/01/02- 01/01/05- 5/01/06
Financial Uncashed Checks 12/31/02 12/31/05
Institution
Banks Safe deposit 5 years 01/01/00- 01/01/05- 5/01/06
boxes 12/31/00 12/31/05
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Presumption of Abandonment

Any funds in a holder’s possession, owed to the


business or individual, become “abandoned” unless:
• There was an owner originated decrease or increase
of the account;
• Owner communicated with the institution in regards
of the property;
• Owner otherwise indicated interest in property, as
evidenced by a memorandum, prepared by an
institution;
• Statements, mailed first class, have not been RPO, as
undeliverable.
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Before Reporting

Prior to reporting holders must attempt to


locate the missing owners through due
diligence mailing

Due Diligence Letter


120 - 60 days before report due date

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Due Diligence

1. The holder has an address in the holder’s


records for an apparent owner and the
records do not indicate that the address is
inaccurate.

2. The value of the property is at least


twenty-five dollars.

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Due Diligence Letter

• Notify owner of existence of property


• Identify property
• Notify owner of pending escheatment to the
state
• Include the escheatment date
• Include actions required by payee to avoid
escheatment – signature, turnaround time
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Sample of a Due Diligence Letter

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Identify
the State of your report
• First Priority:
- Report to the state of the last known address of
the owner
• Second Priority, if first is not possible:
- Report to the holder’s state of incorporation

Vermont can accept incidental property for other


states under our reciprocal agreements
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Ultimate Responsibility
All entities are responsible for filing reports on
behalf of their branches, divisions or other
affiliated groups.

Third-Party Administrators, recordkeepers, paying


agents are not obligated to report unclaimed
property on behalf of a company but may enter
into agreement with the company to do their
reporting. These agreements do not relieve the
company of its statutory responsibility.
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Unclaimed Property
Report Content
• Report full owner’s name
• Last known address
• Social security number/FEIN
• Property type code
• The last activity/transaction date
• Ownership code

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Ownership Codes

Property is paid to the owner in


accordance with the reported ownership
codes:
• Sole owner
• Joint AND/OR owners
• Joint with/without right of survivorship
• Custodian/Beneficiary (UGMA)
• Trustee
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Report Quality

Receiving good data in both the “owner


information” and “property description”
parts of the record:
• Facilitates processing of your report;
• Increases the likelihood of locating owners
of the reported property;
• Significantly eases and expedites the claim
processing.
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Number of Items to
Report

• More than ten items to report –


electronic reporting is required. Free
software from www.wagers.net.

IV. Ten items or fewer – manual reporting


is allowed. Use Schedule A to provide
details.
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Aggregate Reporting

If the amount due the owner is less than $25,


detailed information of the name, the last known
address, SSN, is not required to be reported.

Vermont Statutes permits reporting amounts less


than $25 in the aggregate (i.e. combined in one
record, but summarized by property type). The
property type code on an aggregate record should
always end in “99” (e.g., CK99).
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Rolling Up

You may not aggregate amounts greater


than $25.00. However, you may combine
amounts of $25.01 or greater payable to
a single owner in a given year and
reportable under the same property type.

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Remittances

The check for the full amount of the report


should be made payable to
“The State Treasurer’s Office”
and mailed to
Unclaimed Property Division,
109 State Street, Pavilion Bldg (4th Floor)
Montpelier, VT 05609 – 6200
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Negative Reports

A negative report proves that the holder has


reviewed its records for unclaimed property

Not required, but requested

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Important Considerations

Fees or Charges
No deductions can be imposed on the
unclaimed funds unless you have the
agreement signed by the owner in the
consent of the future deductions.

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Report
Verification & Checklist

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Report
Verification & Checklist

• An officer of the reporting organization


must sign the verification & checklist;
• Signature must be notarized;
• By signing the verification and checklist,
you will cover your entity against liability
on claims for reported property.

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Important Considerations

Record Retention
You are required to retain detail of the filed
Unclaimed Property Reports for 10 years,
including the source records necessary to
establish accuracy and completeness of
your reporting.

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Reimbursement

Claim for “Reimbursement” is a claim


submitted by a reporting organization,
in case, an owner was paid by a holder,
after the property has been reported to
the state.

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Proof to be Submitted
• Proof that the funds were received by the
owner - copy of both sides of the cancelled
check, showing that the check was
negotiated;
• Proof that the account has been re-
established or a new account opened and
funds have been re-deposited.

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Scenarios that Do not Eliminate
the Need to Report

• Telephone contact;
• Internal activity, such as service charges;
• Automatic deposit from one dormant
account into another;
• The statement “Void after XXX days”,
printed on the face of the check.
• Poor records.
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Failure to Comply

• What happens if a holder fails to comply?


- Subject to audits
- Subject to penalties

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Tips to Stay
in Compliance
• Strong Internal Controls
• Control unclaimed property through a
separate account
• On-going due diligence
• Follow up outstanding items after the first
six month
• Feel free to contact us, as often as, you need
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http://www.unclaimed.org

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http://www.missingmoney.com

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http://www.vermonttreasurer.gov

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http://www.vermonttreasurer.gov/unclaimed/index.
html

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http://www.vermonttreasurer.gov/unclaimed/holder
Info.html

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Contact Information

• Unclaimed Property Coordinator


Albert LaPerle
al.laperle@state.vt.us
• Unclaimed Property Compliance Officer
Irina Aylward
irina.aylward@state.vt.us

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Contact Information

• http://www.vermonttreasurer.gov/unclaimed
• General line: (802) 828-2407
• Toll Free in Vermont 1-800-642-3191

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Voluntary Compliance
Program

A unique opportunity for holders to bring


their companies into compliance with the
Vermont Unclaimed Property Law
without any penalties or interest assessed.

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Important Things
To Know
• Public may search reported owners at our
website;
• There is no time limit to claim reported
property;
• Owners are not charged to recover their
property;
• Be aware of the heir finders.

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Unclaimed Property

Questions?

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Part II.
HRS Demonstration

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HRS Backup

Backing up via HRS Pro is a manual


process. There is a \Data folder on each
user’s workstation (the default is
C:\Program Files\Wagers and
Associates\HRS Pro\Data). Simply copying
this entire folder to a secure location serves
as an effective backup.

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